As part of the 2017 "Restock Kroger" plan, the grocer set out to renovate stores and introduce new products to better help support sales growth. But the company has now decided to slow down the pace so it can focus on keeping more stores fully operational.
Kroger's management expected to invest $9 billion and generate $400 million of operating profit once the initiative was complete by 2020. So far, only 20% of the 2,700 store fleet completed a remodel and expectations for a profit boost has been tempered.
CEO Rodney McMullen told WSJ the company simply "put too many things on our stores to executive."
Why It's Important For Kroger
Kroger is also struggling to gain share in new categories, including clothes and cars. The grocer even entered into new relationships with Walgreens Boots Alliance Inc (NASDAQ: WBA) to include Kroger Express stores in Walgreens locations. Other new projects includes the acquisition of a meal-kit company called Home Chef and investments in automated warehouses.
Few of these initiatives are generating any notable revenue lift, according to WSJ.
"You can't get too far into focusing on the new shiny objects," Tory Gundelach, a former Kroger executive and a vice president at Kantar Consulting, told WSJ.
Kroger succeeded in generating more than $1 billion in annual cost savings in each of the past two years and the same trend should play out next year.
"For me, it's learning from a big change within an organization and how do we do that more effectively going forward," Kroger CFO Gary Millerchip told WSJ.
Kroger's stock traded around $26.68 per share at time of publication.
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